Markov Perfect Equilibrium - Definition

Definition

In extensive form games, and specifically in stochastic games, a Markov perfect equilibrium is a set of mixed strategies for each of the players which satisfy the following criteria:

  • The strategies have the Markov property of memorylessness, meaning that each player's mixed strategy can be conditioned only the state of the game. These strategies are called Markov reaction functions.
  • The state can only encode payoff-relevant information. This rules out strategies that depend on non-substantive moves by the opponent. It excludes strategies that depend on signals, negotiation, or cooperation between the players (e.g. cheap talk or contracts).
  • The strategies form a subgame perfect equilibrium of the game.

Read more about this topic:  Markov Perfect Equilibrium

Famous quotes containing the word definition:

    Was man made stupid to see his own stupidity?
    Is God by definition indifferent, beyond us all?
    Is the eternal truth man’s fighting soul
    Wherein the Beast ravens in its own avidity?
    Richard Eberhart (b. 1904)

    According to our social pyramid, all men who feel displaced racially, culturally, and/or because of economic hardships will turn on those whom they feel they can order and humiliate, usually women, children, and animals—just as they have been ordered and humiliated by those privileged few who are in power. However, this definition does not explain why there are privileged men who behave this way toward women.
    Ana Castillo (b. 1953)

    The definition of good prose is proper words in their proper places; of good verse, the most proper words in their proper places. The propriety is in either case relative. The words in prose ought to express the intended meaning, and no more; if they attract attention to themselves, it is, in general, a fault.
    Samuel Taylor Coleridge (1772–1834)